President Barack Obama sees an irony in his relations with the U.S. business community. “On the left, we are perceived as being in the pockets of big business,” he said in an Oval Office interview this past week. “On the business side, we are perceived as being anti-business.”
The criticism from the left, he realizes, goes with the territory; from Franklin Roosevelt to Barack Obama, Democratic presidents always disappoint their party’s left wing.
The business criticism frustrates him. The U.S. Chamber of Commerce and some corporate chieftains have portrayed this administration as government-loving, free enterprise-hating radicals.
This depiction isn’t reflected either in Obama’s record or the 35-minute interview with Bloomberg BusinessWeek. He professes to be a “fierce advocate” for a pro-growth, dynamic free market.
This was more than just trying to appeal to a business audience, as he stresses the need to temper these views with protection for consumers and investors. “There have to be some rules of the road in place in the financial sector that will create an even playing field,” Obama says, noting a need to “restore a sense of balance to the compact between business, government and employees.” That isn’t an anti-business attitude.
Waffling on Trade
To be sure, there are legitimate criticisms. On trade, the president waffles, saying he can’t complete pending accords with South Korea, Colombia and Panama until important details are threshed out.
The South Koreans are cutting trade deals all over the world; it’s the U.S. that’s the outlier. Colombia has a courageous government that is making progress on human rights while battling terrorists; it needs the economic support.
With strong labor opposition, it’s tough politically for a Democratic president. Yet getting the North American Free Trade Agreement and supporting China’s entrance to the World Trade Organization was difficult for Bill Clinton, and he did it.
Articulating a coherent economic policy remains elusive. In the BusinessWeek interview the president was asked to distill his economic message. He spoke about sustainable economic growth that requires innovation, smart energy policy, health care and an educational system that generates the most productive workers.
The parts are fine; there isn’t a unifying theme. It should all be about jobs. The president believes this; too often he doesn’t convey it.
However, neither the policies nor the pronouncements are radical or hostile to businesses. The stimulus plan, most economists believe, was essential, and has ameliorated the bleak jobs picture. The only debate is: Should it have been somewhat smaller or larger?
Critics have a field day characterizing the cap-and-trade bill as job-losing and government grabbing. Yet during the interview with the president, 30 feet away in another session were General Electric Co. Chairman Jeffrey Immelt, Duke Energy Corp. Chairman Jim Rogers, Honeywell International Inc. Chief Executive Officer David Cote and others making common ground with White House Chief of Staff Rahm Emanuel and energy coordinator Carol Browner on energy policy.
That’s hardly a socialist cell.
The Obama health-care plan didn’t envision any government takeover, was small-business oriented and contained a few serious cost-control measures, incurring the displeasure of Democratic liberals and labor supporters. However botched the effort, it wasn’t a march toward U.K.-style national health care.
Focusing on Finance
Nowhere is the Obama approach more evident than on the economy and finance. For starters, he’s smart. As kind as former Treasury Secretary Henry Paulson, in his recent book, was to President George W. Bush, it’s clear Obama’s predecessor was a bystander on major economic policies. No one would say that of the current White House occupant.
He is knowledgeable. In the BusinessWeek interview, talking about the “Volcker Rule” to limit the scope and activities of big banks, or about risky leverage or executive compensation, he is conversant and comfortable. In another interview, I once asked him a reasonably complicated question involving bond yields; fortunately, he was far more informed than the questioner.
Whatever the merits of his proposals, and advisers such as former Federal Reserve Board Chairman Paul Volcker, National Economic Council Director Lawrence Summers and Treasury Secretary Timothy Geithner, they aren’t radical.
Feed Vs. Cede
The left-right divide, or in this case the feed-versus-cede debate, is most vivid in the financial industry. The left wants Obama to feed the populist beast, attacking, in Teddy Roosevelt’s felicitous phrase, the “malefactors of great wealth,” or cousin Franklin Roosevelt’s “moneychangers.” The business community, including some industrial chiefs who don’t much like their Wall Street counterparts, wants him to cede the populist stuff.
Either approach, Obama realizes, would be problematic. A feel-good populist assault would undermine investor confidence; to ignore the public anger at Wall Street bankers and the reckless behavior that threatened the global economy is to abdicate leadership.
Threading the Needle
In the BusinessWeek interview, Obama threaded that needle skillfully. When asked about Goldman Sachs Group Inc. CEO Lloyd Blankfein’s $9 million bonus and the $17 million received by JPMorgan Chase & Co. CEO Jamie Dimon, the president passed up an opportunity to take a shot, praising their talents while acknowledging that to most Americans that’s a lot of money.
That balance infuriated some on the left, and the White House later tried to backtrack a little. (Tellingly, administration officials again passed up any opportunity to criticize Blankfein and Dimon.)
The guess here is that he believes, correctly, that Blankfein and Dimon blew a chance to become popular outside of Manhattan by forfeiting their bonuses for a year. But the payouts were more modest than anticipated and were tied to longer-term performance, and there are more important matters facing the president.
There is another issue that rankles the corporate community: The Obama administration is the first in memory without a major CEO in the Cabinet. Obama makes a convincing case that he needed the financial expertise of a Summers and a Geithner to cope with the worst economic crisis in 70 years.
He could have tapped a CEO for commerce secretary and placated some critics. Of course, the last commerce secretary of any real note was in 1928: Herbert Hoover.
(Albert R. Hunt is the executive editor for Washington at Bloomberg News. The opinions expressed are his own.)